In exchange for regular payments (premiums) to an insurance company, customers – called policyholders – are compensated financially in the event of a loss covered in their contract, or policy. It is a form of risk management.
Risk management itself refers to the way that risks are identified, assessed and prioritised, and the means used to minimize, monitor and control the threat that unfortunate events can pose. Risk may come from many sources, including accidents, natural disaster, uncertainty in financial markets, legal liabilities, project failures and more.
There are many specialised roles within insurance and risk management, but perhaps the insurance professional most familiar to the public is the insurance broker. Brokers guide their customers – individuals or companies – to identify the type and level of insurance they need, and help them buy the most suitable policy.
Other roles in the field include: the evaluation of risk to put a price on the various types of insurance, such as property, health and life insurance – this is called underwriting; the use of financial theory, statistics and mathematics to study and predict future uncertain events, and evaluate the scale of a customer’s risk, known as actuarial science; and determining whether an insurance claim is valid, called claims adjustment. As with most fields, IRM professionals may work for companies or choose to freelance. There is a high level of specialisation in this field, leading to a number of differing career options including insurance broker, appraiser, asset manager, actuary, claims adjustor, compliance officer, customer service representative, financial advisor, insurance analyst, sales representative, underwriter and more.
Insurance and risk management is a strong major combination with finance, economics and law.
Would you make a good insurance or risk management professional?
If you have several of the following interests, qualities and talents, you might consider studying insurance and risk management:
- Excellent analytical and problem solving skills
- An affinity for complexity
- A high degree of proficiency in mathematics
- Focus and great attention to detail
- Strong interpersonal and people skills
- Effective communication skills – verbal and written